The Existing Home Sales report is based on the number of closings for previously-owned, single-family homes, townhomes, condominiums and co-ops. It’s estimated that existing homes account for 85 to 90 percent of all home sales nationwide.

2012 was a good year for housing. Sales of existing homes climbed 12.8 percent as compared to the December 2011 tally, which may be a strong indicator of future mortgage originations and short-term demand for home-related goods.

Based on preliminary sales figures, the number of home resales in 2012 grew 9.2 percent to 4.65 million homes as compared to 4.26 million homes sold during 2011. This marks the highest number of home resales sold in 5 years — a time which predates the recession of last decade.

In addition, the median price of a homes resale read $180,800 in December, which is a 11.5 percent increase as compared to December 2011, and the tenth consecutive month of year-over-year median price growth.

Not since November 2005 has the median home resale price climbed this quickly

Furthermore, the supply of existing homes fell to 4.4 months in December, down 0.4 months from November. At the current pace of sales, the national home resale inventory will be sold by June. This is an important statistic because home supply of less than 6.0-months is thought to represent a “seller’s market”.

There are also just 1.82 million existing homes for sale nationwide — the fewest since January 2001, and a 22 percent reduction from one year ago. With buyer demand high and home inventory down, home prices are likely to rise in Boston are and nationwide throughout 2013.

The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November.

Home sales in December dropped by 1% from November, the National Association of Realtors reported on Tuesday, but still stood nearly 13% above the levels of one year ago. That means home sales have risen from the year-ago month for 18 straight months.

For 2012 as a whole, sales were up 9% to 4.65 million units, the highest annual total since 2007.

Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November and a 21.6% decline from one year earlier, the Realtors’ group said on Tuesday.

Here’s a breakdown of why inventory has continued to drop this year:

Many homeowners are underwater: More than 10 million homeowners owe more on their mortgage than their homes are worth, according to CoreLogic Inc. CLGX -1.45% That pencils out to around 22% of homeowners with a mortgage, or 15% of all homeowners (since not every homeowner has a mortgage). Underwater owners aren’t likely to sell unless they need to move due to changing life (marriage, divorce) or financial circumstances, and they’ll take a hit on their credit for pursuing a short sale, where the bank allows the home to sell for less than the amount owed.Data from CoreLogic show that inventory has been the most constrained in housing markets where there’s the largest concentration of underwater borrowers.

Others don’t have enough equity to “trade up”: Another 10 million homeowners have less than 20% equity in their current residence, meaning they can’t easily “trade up” to their next house. Traditionally, homeowners have relied on home equity to make the down payment on their next home, and to pay their real-estate agent to sell their current home and buy their next one. These “under-equitied” homeowners—meaning they don’t have enough equity to make a move to a more expensive home—have added to the drag on inventory.

Everyone wants to buy at the bottom, but few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow. Would you sell your largest asset today if you thought it might be worth 5% more next year? This helps explain why markets such as Denver and Dallas, which didn’t have huge housing bubbles and thus had smaller shares of underwater borrowers, have also seen double-digit inventory declines.

More purchases from investors of all stripes: From the big institutional investors that have been grabbing all the headlines, to the mom-and-pop landlords that have traditionally played a much larger role renting out homes, investors have increasingly bought homes that can be rented out rather than flipped and resold for quick profits. This is further keeping inventory off the market in two ways: homes that are bought at courthouse foreclosure auctions never show up on multiple-listing services when they’re initially sold. They’re also held out of the for-sale pool because they’re being rented out.

Banks have been slower at foreclosing: Banks and other companies that process delinquent mortgages have had trouble proving that they’ve followed state law in taking title to homes ever since the “robo-signing” scandal surfaced in late 2010, and they’ve also had to meet a host of new state and federal rules governing loan modificationsand foreclosures from settlements spawned by the robo-scandal. Banks have also become better about approving short sales and loan modifications, which has curbed the flow of foreclosed properties onto the market.

Builders have been putting up fewer homes: Housing starts were severely depressed from 2009 through 2011 and have only recently rebounded off of those low levels. Consequently, there’s been much less new home inventory being added to the market at a time when demand (boosted by increases in household formation) is picking up. If more homes are held off the market—for any of the five reasons above—you can bet that builders will move in to fill the void.

Many of these factors that have been dragging down inventory aren’t signs of “normal” or “healthy” housing markets—but then, we probably haven’t had a normal market for around a decade now. If anything, declining inventory shows that normal supply-and-demand dynamics are returning, which is an important step towards putting a floor under home prices and giving markets time to get back to health.

There is a problem in the real estate market in the western suburbs of Boston and an easy problem to fix! There is a supreme shortage of inventory. As of today there are only 80 single family homes for sale and 15 of those have an accepted offer, leaving 65 active listings. A normal market in Newton would consist of approximately 200 homes. There are many buyers out there scrambling for houses.

Seller’s, if you are waiting for the Spring market, wait no longer– the Spring market starts in mid January in Newton and Brookline and a bit later in Wellesley. Don’t wait until everyone else puts their house on the market, this is a supply and demand business. The timing to sell doesn’t get any better, extremely low inventory, banks are lending, buyers are desperate. This is a supply and demand business, don’t waste this opportunity.

My best wishes for a happy, healthy and prosperous New Year. I believe this is going to be a breakout year for the Newton housing market, if inventory increases. As of today, January 9th there are only 82 single-family homes for sale in all of Newton across all price ranges. I know many of you have been waiting on the sidelines for the right time to sell and the time is now. Sellers, the Spring market begins in late January not April. Inventory is the lowest I have ever seen, mortgage rates are at historic lows AND banks are willing to lend. I expect to see 2-3% gains, (possibly 5% for very special homes) by the end of 2013. I do not expect to see 7-10% gains in value per year in the near future.

The first half of 2012 was very busy; houses were selling in record time at very good list to sale price ratios. The momentum did not carry into the fall market as expected mainly because inventory levels were so low that there just was not anything to buy. We have averted the fiscal cliff and survived the presidential election.

West Newton Hill had 42 homes sell in 2012 versus 25 in 2011, a considerable increase! Prices also rose along with the sales to an average sale price of $1,657,000 from $1,458,000 in 2011. While this is good news, these numbers need further dissecting. The market was undeniably better, but not 12% better. What was different in 2012? 12 homes sold for 2 million or more in 2012 versus 3 in 2011. The 2 million+ homes had been the most difficult to sell in the past 5 years and we finally broke through that barrier in 2012. If you look at home prices on a square footage basis, it tells a different story, the price per square foot was $405.00 in 2011 opposed to $388.00 in 2012. New construction is the most sought after home in the 2 million dollar and above range. To break through the 3.5 million range the house needs to be new or like new on a large level lot with outstanding craftsmanship and many amenities.

Please call me with any real estate needs you have. My formula for pricing houses is spot on. I can be reached via phone, e-mail or text at 617-921-6860 or margaretszerlip@gmail.com.

Address Sale Price SQ.FTs

64 Perkins St $785,700 388.00

386 Chestnut $800,000 442.00

24 Mt. Vernon Te $808,425 328.00

12 Westfield Rd $936,582 364.00

159 Mt. Vernon St $950,000 404.00

17 Wauwinet Rd $1,030,000 385.00

9 Wauwinet Rd $1,054,000 449.00

1663 Commonwealth $1,060,000 364.00

120 Forest Ave $1,097,000 348.00

29 Westfield Rd. $1,099,000 335.00

32 Leonard $1,111,500 320.00

1159 Commonwealth $1,122,500 317.00

39 Valentine Park $1,146,400 325.00

54 Ellis Road $1,192,500 312.91

128 Highland St $1,200,000 355.66

386 Highland Street $1,220,000 404.00

58 Valentine Park $1,250,000 384.00

219 Fuller Street $1,260,000 337.00

381 Highland Street $1,268,000 335.00

64 Myrtle St $1,325.000 310.00

36 Howland Rd. $1,360,000 485.00

50 Putnam St $1,366,840 312.71

318 Prince St. $1,420,000 282.00

33 Berkeley St $1,458,000 389.00

70 Crestwood Rd $1,510,000 400.53

9 Somerset Rd $1,549,000 371.00

80 Dartmouth St $1,550,000 646.00

146 Forest St $1,610,000 365.00

212 Chestnut St $1,790,000 380.00

224 Chestnut St $1,950,000 433.00

40 Wykeham Rd $2,000,000 400.00

212 Temple St * $2,172,500 305.00

79 Hillside Ave $2,175,000 395.00

212 Temple St * $2,300,000 323.00

315 Highland Ave $2,550,000 418.00

5 Crocker Circle $2,550,000 495.00

49 Shaw St $2,680,000 388.00

170 Otis St $2,990,000 471.00

165 Highland Street $3,585,000 618.00

18 Temple St $3,999,000 629.00

26 Dartmouth St $4,200,000 671.79

42: Sold Average List: $1,742,000 Average Sale: $1,657,000 Average Living Area SQ FT: 4,177

We hope you had a nice holiday season and a Happy New Year! Today we released the December and year-end 2012 pending home sales report for single-family homes and condominiums in Massachusetts. For the 20th straight month, homes put under agreement were up over the same month last year. For the complete year, the total number of homes put under agreement in 2012 significantly topped the number of homes put under agreement in 2011.

Lunch and Learn at Bernard’s in the Chestnut Hill Mall, January 23, 2013 at 12:30. Space is limited to 10 people and we will discuss current real estate market conditions followed by a Question and Answer session.